Friday, August 8, 2014

WSJ - THE WHAT-DO-YOU-KNOW OF GMO?

How We Eat

The GMO Fight Ripples Down the Food Chain

Facing Consumer Pressure, More Firms Are Jettisoning GMOs From Their Foods

By Annie GasparroUpdated Aug. 7, 2014 10:38 p.m. ET

Genetically modified foods, or GMOs, are in an estimated
80% of packaged foods. Some companies, like Ben & Jerry's, are
trying to go GMO-free. But it's not easy. An animated explainer.

Two years ago, Ben & Jerry's Homemade Inc. initiated a plan to eliminate genetically modified ingredients from its ice cream, an effort to address a nascent consumer backlash and to fulfill its own environmental goals.

This
fall, nearly a year behind schedule, it expects to finish phase one,
affecting its flavorful "chunks and swirls" like cookie dough and
caramel. The only part left to convert: the milk that makes ice cream
itself. Thanks to the complexities of sourcing milk deemed free of
genetically modified material, that could take five to 10 more years.

"There's a lot more that goes into it than people realize," said Rob Michalak, Ben & Jerry's director of social mission.

Two
decades after the first genetically engineered seeds were sold
commercially in the U.S., genetically modified organisms—the crops grown
from such seeds—are the norm in the American diet, used to make
ingredients in about 80% of packaged food, according to industry
estimates. (Take a quiz about GMOs.)

Corporate Intelligence

Now an intensifying campaign,
spearheaded by consumer and environmental advocacy groups like Green
America, is causing a small but growing number of mainstream food makers
to jettison genetically modified organisms, or GMOs. In addition to Ben
& Jerry's, a subsidiary of
UnileverULVR.LN -0.82%
PLC,
General Mills Inc.
GIS +0.53%
this year started selling its original flavor Cheerios without GMOs. Post Holdings Inc. took the GMOs out of Grape-Nuts.
Boulder Brands Inc.
BDBD -2.47%
's Smart Balance has converted to non-GMO for its line of margarine and other spreads.
Chipotle Mexican Grill Inc.
CMG -0.54%
is switching to non-GMO corn tortillas.

"Non-GMO"
is one of the fastest-growing label trends on U.S. food packages, with
sales of such items growing 28% last year to about $3 billion, according
to market-research firm Nielsen. In a poll of nearly 1,200 U.S.
consumers for The Wall Street Journal, Nielsen found that 61% of
consumers had heard of GMOs and nearly half of those people said they
avoid eating them. The biggest reason was because it "doesn't sound like
something I should eat."

Grass roots
campaigns in several states are pushing for mandatory labeling of foods
with GMOs—something most food companies staunchly oppose. In May, Vermont adopted the first state law requiring companies to label GMO foods, starting in 2016.

The
anti-GMO backlash reflects the deep skepticism that has taken root
among many U.S. consumers toward the food industry and, in particular,
its use of technology. Similar criticism has roiled other food
ingredients including artificial sweeteners and finely textured beef,
the treated meat product that critics dubbed "pink slime." The Web and
social media have enabled consumer suspicions in such matters to
coalesce into powerful movements that are forcing companies to respond.

A continuing series about how consumer perceptions and corporate strategies shape the national diet.

Critics of GMOs—which have combined
genes from different organisms to make some staple crops more
durable—say there haven't been enough independent studies on the
long-term health and environmental consequences of what they dub as
"Frankenfood." They cite a handful of studies outside the U.S. that
found toxic effects on animals fed genetically modified crops, and point
out that 64 nations, including the European Union countries and China, require labeling of GMO products.

"If
it turns out that after doing the studies, the scientific evidence
shows GMOs are OK, I will change my mind," said
Alisa Gravitz,
a board member of the Non-GMO Project and chief executive of
Green America. "But until then, why infect our entire food supply with
this, when the early studies, the bona fide, peer-reviewed ones, throw
up some red flags?"

For its part, the
food industry says those studies are inconclusive and that none has
shown any link to harm to humans. Proponents also point out that GMO
crops used in the U.S.—which also include alfalfa, cotton, papaya and
squash—have been approved by the Food and Drug Administration, which
doesn't mandate labeling food that contains them. And even though the European Union requires labeling in member countries, it has approved many GMO foods as safe for consumption.

The
debate aside, how companies like General Mills and Ben & Jerry's
fare in dropping GMOs will offer a guide to others that are considering
it. So far, the process has proved expensive, complex and politically
dicey. For Ben & Jerry's, the premium for non-GMO ingredients ranged
from 5% to 20%, reflecting how deeply rooted the technology is in the
U.S. food chain. Ben & Jerry's says it plans to eat the costs rather
than pass them on to customers.

But the
forerunners are also encouraging farmers and ingredient manufacturers
to increase the supply of non-GMO items, which could make it easier for
food makers to follow.

Certainly, the stakes are large for companies like
Monsanto Co.
MON -0.19%
and
DuPont Co.
DD +0.14%
, which sell genetically engineered seeds to give crops traits
like the ability to repel insects or resist weed killers. Today, more
than 90% of corn, canola, soybean and sugar beet crops in the U.S. are
genetically modified. Most of the produce Americans consume directly
isn't GMO, but the crops are used to produce common ingredients like
corn syrup, soy lecithin and more than half of the sugar consumed in the
U.S.—plus the feed consumed by most of the nation's livestock.

In a statement, a spokeswoman for Monsanto said the company was confident
about the safety of its seeds based on an "extensive body of rigorous
testing" by company and independent researchers. DuPont pointed out the
technology was backed by "regulatory agencies and scientific
organizations around the world." The switch to GMO, proponents say, has
led to higher crop yields and lower food costs.

When
a big brand announces plans to drop GMOs, it stirs the debate further.
GMO backers criticized General Mills for its change to Cheerios, saying
it gave credence to misperceptions of the technology. Anti-GMO groups
quickly started calling on General Mills to drop them from its Honey Nut
Cheerios, too. The company said that changing the ingredients of its
other cereals would be too difficult, but that GMO products are safe,
adding that it offered the non-GMO variety to give consumers more
options.

Ben & Jerry's, which ranks fifth
among U.S. ice cream brands by sales, says it doesn't consider GMOs
unsafe to humans either, but has always positioned itself as an
environmentally friendly, socially progressive brand. Executives long
wanted to drop GMOs, which they feel are part of industrialized,
chemical-intensive agriculture that the company opposes, said Mr.
Michalak, the social mission director. But the company didn't start
discussing converting its flavors with suppliers until 2012.

That
year, anti-GMO advocates got on the California ballot Proposition 37, a
measure requiring GMO labeling similar to the one that later passed in
Vermont. Food and agriculture companies poured more than $46 million
into advertising to fight the measure,
saying it would confuse consumers and raise food costs. The measure
narrowly failed to pass, but it galvanized GMO opponents and put the
industry on notice.

Ben & Jerry's
didn't get directly involved in the California fight. But the battle
"catalyzed the movement for us," said Cheryl Pinto, Ben & Jerry's
ingredient sourcing manager. "When all the non-GMO hoopla hit the fan,
we realized we better accelerate our conversion."

Aside
from the milk, Ben & Jerry's said most ice cream ingredients were
already non-GMO. Still, the company needed to check with suppliers and
rigorously investigate all 110 ingredients it uses to make ice cream.
Among the surprises: finding out a product couldn't be considered
non-GMO if the supplier dusted the pan with cornstarch before baking.
The supplier had to switch to rice starch.

"Our suppliers generally had to negotiate all the way down the supply chain to get to the farmer," Ms. Pinto said.

At
the farm level, companies confront a chicken-or-egg-type conundrum.
Food makers are hesitant to commit to dropping GMOs until they are sure
they can find sufficient sources of non-GMO crops. But farmers are
reluctant to switch seeds unless they know there will be guaranteed
demand for non-GMO crops at a premium price.

Mercaris,
a market data researcher, said prices last year for non-GMO corn
averaged 51 cents per bushel higher than those for regular, GMO corn.
That is a significant difference for farmers when the national average
corn price was between $4 to $4.50. But some farmers also worry that
dropping GMO seeds could lower their yields, meaning fewer bushels per
acre.

Ben & Jerry's paid an average
of 11% more for each ingredient that changed to a non-GMO version. In
some cases that also included the higher cost of sourcing ingredients
from Fair Trade suppliers—those certified as paying fair prices to
producers in developing countries—which it did simultaneously.

The
company says it can't quantify how much it spent on the non-GMO
conversion in total. "It was really expensive," Ms. Pinto said.
"Surcharges came in from transportation. Instead of buying beet sugar
from down the road, you're buying cane sugar from much farther away."
The conversion also required time and money to design new labeling and
marketing and carry out legal reviews, she said.

For its Chubby Hubby ice cream, Ben & Jerry's had to change peanut butter pretzel suppliers because
ConAgra Foods Inc.,
CAG -0.10%
which bought the company that supplied the pretzels, was
unwilling or unable to adhere to the non-GMO and Fair Trade
requirements, according to people familiar with the situation. The
change in suppliers also caused a shift from peanut butter-filled
pretzels to peanut butter-coated ones, prompting some consumers to
complain. ConAgra declined to comment.

To
some degree, Ben & Jerry's process was simple relative to what some
companies put themselves through. Unlike with organic foods—which also
can't contain GMOs but must follow additional restrictions—the
government sets no standard for what qualifies as "non-GMO." Companies
seeking some authoritative imprimatur must go to third-party certifiers,
usually the Non-GMO Project, a nonprofit group founded by natural foods
retailers. It vets applicants with an almost religious exactitude.

To
gain its certification, Enjoy Life Foods LLC, a small Schiller Park,
Ill.-based company that makes gluten- and allergen-free snacks, traced
its honey to the hive. "We had to go to our honey suppliers, who went to
the bee keepers, who had to actually determine how far the bees could
fly to make sure they weren't cross-pollinating at any GMO fields," said
Joel Warady,
its chief sales and marketing officer.

He
said the company thought it was done a year before it actually was,
because Non-GMO Project kept coming with questions, including how far
their bees flew. "I was like, 'Are you serious? I don't know,' " said
Mr. Warady. " 'I didn't talk to the bees.' "

The
Non-GMO Project, which has verified more than 17,000 products, says
such lengths are necessary to ensure the bees aren't feeding on nectar
or pollen from GMO crops. Thus, the organization requires a four-mile
radius from the bee hives be clear of GMO fields.

"Consumers
don't know how difficult it is, but they also don't care how difficult
it is," said Mr. Warady. "They say, 'I want the food all natural. I want
it to be non-GMO. I want it to taste great. And by the way, I don't
want to pay any more for that. Figure it out.' " Enjoy
Life Foods3065.TO -1.23%
doesn't explicitly pass on the added costs, but its food is
already priced at a premium to mainstream brands. For its part, Ben
& Jerry's didn't seek Non-GMO Project certification, citing the
complexity, but does use an auditor. "For us, our size and our scale, we
had to be" realistic about where to start, Ms. Pinto said.

The
number of big companies that have announced plans to drop GMOs is still
small. Big industry groups like the Grocery Manufacturers Association
say the trend is baseless, but they admit it is growing. They continue
to lobby against GMO labeling and tout the benefits of the technology.

Still,
industry executives say many of those companies are asking suppliers to
develop non-GMO options so that they can be ready in case label
mandates spread, which the companies fear could hurt products containing
GMOs.
Brian Sethness,
senior account executive at Sethness Products Co., which supplies
caramel coloring to major food and beverage companies, said the company
is receiving more inquiries about non-GMO products than ever before.
"Most haven't pulled the trigger yet though, they just want to know
what's out there," he said.

For Ben
& Jerry's, the biggest hurdle is milk. The vast majority of the feed
given to dairy cows in the U.S. is made with GMO corn, soybeans and
alfalfa. That makes it difficult to find non-GMO milk in quantities
large enough for Ben & Jerry's, so the company hasn't committed to
doing it. Labeling laws like the one passed in Vermont don't apply to
meat or dairy derived from animals that consumed GMO animal feed, buying
Ben & Jerry's more time. "We are having conversations with multiple
stakeholders throughout the entire supply chain," Mr. Michalak said.
"It's a slow process."